If you are considering selling your house you will likely come across an appraisal at one point or another. It may be first before selling to get an understanding of what the house could sell for. It may be later when you have to see if the house will appraise for what the buyer’s bank is giving them a loan for.
No matter the situation, we will help try and shed some light on how an appraisal impacts selling a house in Houston in today’s article brought you by the Brilliant Day Homes Team.
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What Is An Appraisal?
An appraisal is an educated guess. When you want an appraisal, the professional who gives you the appraisal will usually find the number based on what other comparable houses in the area have sold for recently.
They’ll look at several factors (including, but not limited to the number of bedrooms or bathrooms, whether the basement is finished or not, etc.). Of course, it’s just an educated guess based on research, and there are other factors that may influence the price beyond the appraisal.
The appraisal will highlight things you want to be aware of. It will show you what other people are willing to pay for a house and often what they consider to be important factors in the area.
What Is The Difference Between The Selling Price And Appraised Value?
Are you wondering what the difference between the selling price and the appraised value is? To better understand this, we need to define what the each of the terms actually means.
- There’s the asking price – the price you WANT to sell your house for
- There’s the appraisal or valuation – the price that a real estate professional thinks you should try to sell your house for
- There’s the selling price – the price that someone will ultimately pay for your house.
An appraisal should probably affect your asking price but it won’t affect the selling the price. Just because a house is appraised at a certain price doesn’t mean anyone will actually pay that much for it. In the same fashion, just because a house is sold at a particular price, doesn’t mean it will appraise for that much.
An Appraisal For Determining The List Price
The appraisal can help you select an asking price that potential buyers seem willing to pay. For example, you might choose an asking price that is higher than the appraisal because your house is a better house, or you might choose an asking price that is lower than the appraisal because your house needs some work. As we discussed earlier, the appraisal won’t be able to tell you what the final sales price will be, but it will give you an idea of what the asking price/list price should be.
Do You Need An Appraisal When Selling Your House?
The appraisal is one factor that a mortgage lender considers when deciding whether or not to approve a final loan request. Even if a borrower had preapproval, a low appraisal could cause the mortgage to fall through.
Why is this? A lender only wants to lend enough to cover what the home’s actual value, and if the appraisal comes in lower than what the borrower is asking for, the lender can deny the loan.
If the lender does not deny the loan completely, they may refuse to lend more than the home’s value. In order to buy the home at the agreed price, the buyer may need to come up with the difference in cash at closing.
What Happens If The Appraisal Is Lower Than The Offer?
If you are selling your house and the appraisal comes in low, the buyer will then have to put down additional money to make up the difference between the buying price and the appraised value. This assumes that the buyer has the additional cash to add to the down payment.
If the buyer is unable or unwilling to pay more for a house that doesn’t appraise the next option would be to lower the asking price to meet the appraised value. In circumstances where the buyer won’t come up and the seller won’t go down the only option is to put the house back on the market and start over.
The Bottom Line
The appraisal is a guide; an educated guess. But you should also be aware that the appraisal is not always correct. There are many factors that determine the sale price of a house and an appraisal is only a starting point. Therefore, it won’t likely influence the selling price.
Are you thinking about selling your house?
Why bother with an appraisal at all? Why bother with showing your house to a bunch of strangers, and waiting month while they decide whether or not they want to buy. You can get a fair all-cash offer from us to buy your house fast… and then you don’t have to worry about getting an appraisal, or listing the house, or showing your house, or negotiating. Just pick up the phone and give our team a call at (713) 903-2582 or click here now and enter your information into the form.